Are a political power struggle and a sweetheart deal fueling the city's push to privatize the summer music festivals?

December 6, 2010

As reported by this blog on Nov. 22, with little fanfare or public discussion, the city has issued a request for proposals to privatize Chicago’s biggest free music celebrations—including Taste of Chicago, the Blues Festival, and the Jazz Festival—with responding bids due by the under-the-radar hour of 4 p.m. on Dec. 23.

What’s really going on? Some sources say that in its waning days, the Daley administration is using the city’s fiscal crisis—a budget shortfall of $655 million this year—as an excuse to turn the city’s festivals over to a private company, along with the potential economic risks and rewards of staging them, similar to the way it sold the parking meters and the Skyway.

A few say that city officials expect that private promoters are unlikely to jump at such a difficult and potentially costly proposition, which is made even more complicated by women and minority hiring rules, and that the request for proposals really is just political posturing to make it look as if the mayor is doing something about the festivals’ supposed drain on city resources.

But the $2.5 million that the city reports that it spends on staging the seven festivals up for bid barely is a drop in the bucket of an overall city budget of $6.2 billion. And sources say that in most years, the festivals have made money for the city—though the exact amounts are noticeably missing in the request for proposals.

Fueling the push for privatization, some sources say, is a power struggle between the soon-to-be-merged Mayor’s Office of Special Events and the Department of Cultural Affairs, which will oversee the festivals in whatever form they take in the future, and a possible sweetheart deal in the making with a favorite well-connected candidate among the potential bidders: Austin, Texas-based promoters C3 Presents, who already have a very lucrative deal with the city to keep Lollapalooza in Grant Park through 2018.

The city’s solicitation document seeks “event producers who are willing to produce orderly festivals of the highest standards consistent with the reputation of a world-class city, and which are consistent with the concept of providing family-focused events with budget-friendly food and beverages for sale.”

The document is 96 pages long, but it leaves more questions hanging than it answers. Chief among them: Do the privatized festivals have to remain free? If so, what will the city allow in terms of corporate sponsorships and other schemes so that promoters can recover the expenses and then turn a profit? And: Will the reinvented festivals even remotely resemble the events as they’ve been staged in the past?

“The City does not require that the Events be produced exactly as the City has produced them, but if respondent wishes to propose deviations from the events as they are currently planned (for example, having restaurants outside the City of Chicago at Taste of Chicago), that plan should be spelled out in the proposal,” is as specific as the solicitation document gets.

Promoters can bid for one package consisting of the Blues Festival, the Taste of Chicago, and the Chicago Jazz Festival, each of which draw 300,000 to a million visitors a year; a second package comprised of the Celtic Festival, the Gospel Music Festival, the VIVA Chicago Latin Music Festival, and the Country Music Festival, which draw 100,000 to 300,000 people, or both packages with all seven festivals.

Last year, the latter four were held in Millennium Park, while the big three took place in Grant Park. An important aspect of the request for proposals that I missed in my last blog post on this topic is that the city wants all seven of the festivals to take place in Grant Park in 2011 and beyond. This means that, with the possible exception of Lollapalooza, the winning bidder essentially will control Grant Park from early May through mid-October, to say nothing of playing a major role in dominating the music that Chicagoans hear for six months of the year.

From the solicitation document: “For the purpose of this RFP the City is designating Grant Park as the venue for the events. No events will be held in Millennium Park.”

The seven festivals in question all have been run by the Mayor’s Office of Special Events. Noticeably absent from the list of festivals for sale (or rent, if you prefer) are the World Music Festival, the Downtown Sound series, and the SummerDance Chicago events, which all have been run by the Department of Cultural Affairs at Millennium Park, its primary purview, and which by many measures have been more successful economically and artistically than the other city festivals.

On the surface, the city’s request for proposals seems to be restricted to Grant Park and the big, expensive, and all-too-often mundane festivals as they’ve been run by the Mayor’s Office of Special Events. Cultural Affairs would seem to be left alone to keep doing what it’s been doing so well. But here’s where things get complicated.

Next month, as a result of consolidations prompted by the budget crisis, the Mayor’s Office of Special Events will be merged into Cultural Affairs to form a new entity called (surprise!) the Department of Cultural Affairs and Special Events. This new super-department will be run by Lois Weisberg, who has been the commissioner of Cultural Affairs since 1989, but who, at age 85, seems to have been working for the betterment of Chicago’s aesthetics pretty much forever.

A bona fide legend in arts circles, Weisberg co-founded the Chicago Cultural Center and Friends of the Park; was instrumental in launching Gallery 37, Taste of Chicago, the blues and gospel festivals, and the beloved Cows on Parade, and was cited as a “connector” by no less an authority than Malcolm Gladwell.

In contrast, the Mayor’s Office of Special Events has been run since March 2007 by Megan McDonald. Now in her early 30s, she landed this prestigious and lucrative gig with seemingly few professional credentials, and it wasn’t the first time she’d plucked such a ripe plum: In her mid-20s, McDonald served as the director of Lakefront Operations for the Park District. But she has some other qualifications that might not be so obvious.

McDonald is extremely close to Mayor Daley and his family. Like his daughter, Nora, she attended St. Ignatius College Prep on the South Side and Fairfield College in Connecticut. She also is close to several of the mayor’s nieces and nephews—including Mark Vanecko, the mayor’s relative who served as an attorney and registered lobbyist helping Lollapalooza craft its deal with the city.

Though Cultural Affairs would seem on paper to be the dominant department in the merger, it has suffered all of the 13 jobs that were eliminated and the nine people who were laid off stemming from the consolidation. Meanwhile, as Sun-Times City Hall reporter Fran Spielman revealed, Special Events lost one $74,000-a-year secretary, Maureen Volini, the wife of a former ward boss and daughter-in-law of a former alderman, whose job was saved by moving her to a different department.

Wrote Spielman: “Special Events Director Megan McDonald denied that Volini was spared because of politics. ‘As long as I’ve known Maureen, I wasn’t aware of clout at all,’ McDonald said.” Of course, the Daley family favorite may have a very different definition of clout than all of those outside the mayor’s inner circle.

Though McDonald and everyone else at the Mayor’s Office of Special Events will theoretically soon be working for Weisberg, sources say that neither Weisberg nor anyone else at Cultural Affairs was consulted when crafting the request for proposals to privatize the city festivals. And though the city will not reveal the names of the officials who will weigh the proposals and possibly award a contract, the evaluation committee does not include anyone from Cultural Affairs.

From the solicitation document: “An Evaluation Committee… will include representatives from the Mayor’s Office of Special Events, Chicago Park District, the Mayor’s Office for People with Disabilities, the Office of Budget and Management, and the Department of Procurement Services.”

Asked last week via email to comment about the privatization effort, Weisberg wrote, "I appreciate your writing to me about the future of the festivals, but at this point in history, I do not have any information on this. I will be more than happy to discuss this with you when I have received the information and have had time to review it."

Weisberg said much more in a Sept. 18 interview with Spielman that is no longer on the Sun-Times Web site. Despite appearances, the cultural doyenne is as wily a politician as Chicago ever has produced; she also is a close friend of Daley’s wife Maggie. But she was harshly critical of the mayor’s festivals privatization plan.

“There is no private company that could afford to come in and not charge admission,” Weisberg said. “The private company has to make money. That’s what they’re in business for. They also have to give the city money. That’s where it becomes impossible.

“Chicagofest was a private festival run by a Milwaukee company that got into serious trouble,” Weisberg continued, referring to Taste of Chicago’s predecessor. “There was a secret fund that didn’t make the city look good. The city has done a good job with these festivals with a staff that’s been trained for years to handle it. Not everything should be privatized.”

Weisberg concluded that she knew her stand against privatization would raise the mayor’s ire. “I shouldn’t be talking to you,” she told Spielman. “But I guess they can’t fire me.” (It remains an open question, however, whether Weisberg will resign or retire, as many department chiefs are expected to, when Daley leaves office in the spring. Her deputy at Cultural Affairs, Janet Carl Smith, announced her retirement late last month.)

“The idea is that there is possibly a private company out there who has better ideas, a better financial infrastructure right now, to be able to take away some of the financial risks that the city has,” McDonald said. “We’ll see what comes back.”

Pressed ever so gently by Jarrett about whether the festivals would remain free, McDonald said, “Given the fact that the economy has been so challenging, I just don’t know how you can have a festival going forward without having some sort of guaranteed revenue. I don’t know what the likelihood is of a private company coming in and taking on all the financial risk of the city and then not wanting to charge an admission fee.”

And asked whether Daley would make a deal to privatize the festivals before he leaves office—the solicitation document specifies a three-year contract with two one-year extensions, or more than the entire first term of the next mayor—McDonald said, “I don’t think he wants to saddle a new mayor with festivals that are costing us more to operate than we’re actually making. I haven’t spoken directly to him about whether he’s going to wait for the new mayor or make a decision on his own. I think he’s just trying to do what he can to salvage what has become a really popular summer tradition.”

Sources say that the city’s model for a “festival savior” is Lollapalooza promoters C3 Presents, though as this blog has reported, it’s debatable whether Chicago, having waived the taxes that any other promoter would pay for a similar private for-profit concert in Grant Park, really is earning all that it should from that giant musical Walmart on the Lake. Certainly C3’s political connections don’t hurt in maintaining its halo, and the company is just as well-connected with one mayoral frontrunner, Rahm Emanuel, whose brother’s Hollywood talent agency quietly owns 50 percent of Lollapalooza.

Among the companies represented at the pre-proposal privatization conference that the city held on Nov. 18 were local promoters Jam Productions and representatives of the Chicago office of giant national concert promoters Ticketmaster/Live Nation. C3 was conspicuously absent, though Altha Riley, the contract negotiator for the Department of Procurement Services who ran the meeting, noted that one possible out-of-town bidder already had submitted several questions about the city’s hopes for the privatized festivals.

Those questions, as well as the queries posed during the meeting and the city’s answers, will be posted on the Web and made part of the public record for the bidding process on Friday, Riley said. They should make for very interesting reading.

Meanwhile, 2011 is almost certain to be a singularly dreadful year at all of the Grant Park festivals. Headliners almost always are booked by the fall, but with the uncertainty about whether the city will continue running the festivals, sources say that the Mayor’s Office of Special Events has done little or nothing to organize this summer’s lineups. Of particular concern is the Blues Festival, whose veteran coordinator, Barry Dolins, retired after last year’s event.

If the city does choose a festival savior from among the bidders early next year, that new promoter will have to be able to walk on water to pull so much together in so short a time. And turning the festivals over to a private company will mark the start of a new day in Chicago—one where the marquee musical events in the city’s biggest park are just another asset controlled, marketed, and exploited by corporate rather than civic interests.